Mr. Chike’s monthly net salary is N61,000. He has three children that attend the Lagos State Government Secondary School in the Iba Housing Estate on the outskirts of Lagos. Although the fees for the children is meager compared to the private schools in the vicinity, with his salary, he fed his family of five, clothed them, provided shelter, and he spent at least N20,000 on transportation every month to and from work.
That was prior to the removal of fuel subsidy, announced on May 29, 2023, by President Bola Tinubu. With the increase in the price of fuel, Mr. Chike spends twice the amount on transportation. But not only that, his landlord has informed him of his intention to increase his house rent by 50 per cent, and the prices of food commodities on the market are on the increase daily. That excludes eventualities such as hospital bills when members of the family fall ill.
Clearly, Mr. Chike can hardly adjust to the new reality of inflation and static wage. Mr. Chike’s case is not an isolated one. Indeed, for many Nigerians, that’s the new reality – high inflation and static wage.
Nigeria’s economy is grappling with that dual challenge – soaring inflation and a minimum wage that fails to keep pace with the rising cost of living. As Nigerians struggle to make ends meet, concerns over the welfare of low-income earners, the unemployed, and other vulnerable groups are growing. The alarming economic indicators demand urgent attention from policymakers and stakeholders to prevent a deepening crisis.
The term “inflation” has become all too familiar to Nigerians, representing the relentless increase in prices and the erosion of the purchasing power of the Naira. It is rightly called the thief of prosperity. Recent data from the National Bureau of Statistics (NBS) reveals that the headline inflation rate hit 22.79% year on year (YoY). Food inflation rate reached a staggering 25.25 percent in the same period, with key items like bread, cereals, oil, fat, potatoes, yam, and fish witnessing substantial price hikes.
The worsening cost of living crisis has far-reaching implications for the average Nigerian. Basic essentials such as bread, milk, and rice are becoming unaffordable luxuries, forcing many families to skip meals and struggle to make ends meet. This dire situation is particularly detrimental to the unskilled laborers, the unemployed, and those on fixed incomes like pensioners. With food inflation at 25.25 percent, the majority of Nigerians who spend 60% of their income on food and related expenses are severely impacted.
Compounding the high cost of living is the inadequacy of Nigeria’s minimum wage. The current minimum wage, set at ₦30,000 ($39) per month, fails to meet the basic needs of workers and leaves them trapped in poverty. As the minimum wage lags behind inflation, workers find themselves struggling to cope with the rising cost of living, leading to reduced quality of life and increased poverty rates.
The widening gap between inflation and the minimum wage further exacerbates income inequality. The disparities between the salaries of public officials and corporate executives and the meager earnings of low-income earners highlight social injustice and fuel discontent among the population.
The root causes of Nigeria’s economic woes are multifaceted and require comprehensive action. Factors contributing to inflation include excessive government spending, devaluation of the Naira, insecurity in farming communities, increased production costs, and the nation’s economic policies. These issues, coupled with high taxes, public spending, and unemployment, create a perfect storm that leaves millions of Nigerians struggling to survive.
The consequences of the rising cost of living and inadequate minimum wage are far-reaching. The surge in inflation has eroded consumers’ purchasing power, pushing millions into multidimensional poverty. As basic necessities like beans and eggs become unaffordable, malnutrition rates are on the rise, with millions of children facing acute food insecurity and stunted growth. These concerning trends have placed Nigeria among the “hotspots of global hunger.”
The situation demands swift and effective measures from the Nigerian government and stakeholders. Proper management of the economy is crucial to prevent further escalation of the crisis. Policies that address excessive spending, boost productivity, and foster job creation are necessary to mitigate the impact of inflation.
Commenting the cost of living crisis in Nigeria, lecturer of Banking and Finance at Auchi Polytechnic, Zakari Mohamed, said raising the minimum wage is an urgent priority to ensure workers can meet their basic needs and improve their quality of life. He said a fair and just minimum wage will not only empower the workforce but also contribute to increased productivity and economic growth.
“Additionally, efforts to address the high cost of living must include strategies to stabilize food prices, promote domestic production, and ensure that essential commodities remain accessible to all Nigerians,” he said.
Nigeria’s current economic situation demands urgent and decisive action. Combating inflation and addressing the inadequacy of the minimum wage are critical steps in alleviating the hardships faced by the most vulnerable citizens. By implementing effective policies and strategies, Nigeria can forge a path towards economic stability, improved living standards, and a more equitable society. Time is of the essence, and collaborative efforts from all stakeholders are essential to secure a better future for all Nigerians.
Also, economic affairs analysis, Dr. David Ike, stated that reducing the high cost of living in Nigeria requires a combination of short-term measures and long-term strategies that address various economic factors contributing to inflation. He noted that the government must exercise fiscal discipline by reducing unnecessary expenditures and avoiding excessive borrowing. He said a balanced budget and prudent financial management will help curb inflationary pressures.
On his part, agronomist and writer, Gbenga Johnson, said investing in agriculture and improving productivity in the sector can boost food production and reduce the dependence on expensive food imports. Support for farmers, access to modern agricultural techniques, and investment in agro-processing industries can contribute to stabilizing food prices.
He also stated that efforts to stabilize the Nigerian currency will help combat inflation, as a weaker Naira contributes to rising import costs. “Adopting sound monetary policies and improving foreign exchange reserves can help achieve this goal,” he said.
Still commenting, lecturer at Adeleke University, Dr. Tayo Bello, said investing in infrastructure, particularly in transportation and power supply, can reduce production costs and improve overall economic efficiency. “This, in turn, may help mitigate inflationary pressures.
“Reducing Nigeria’s dependence on oil and diversifying the economy into other sectors can create more employment opportunities and generate economic growth. A diversified economy is less susceptible to external shocks and can contribute to price stability.
“SMEs play a significant role in the Nigerian economy. Providing financial and non-financial support to these businesses can spur economic growth, create jobs, and contribute to price stability,” he stated.
Financial economist, and lecturer at the Department of Banking and Finance, Nnamdi Azikiwe University, Dr. Felix Echekoba, said implementing targeted social safety nets for the most vulnerable populations can help alleviate the impact of rising prices on low-income earners. He noted that programmes such as cash transfers, food subsidies, and school feeding initiatives can provide relief to those facing the brunt of inflation.
“Conducting a comprehensive review of tax policies can ensure that the burden is distributed fairly and does not exacerbate inflationary pressures. Striking the right balance between generating revenue for the government and alleviating the burden on citizens is crucial.
“Also, improving the quality of education and providing skills training can enhance human capital and workforce productivity, ultimately leading to higher incomes and a better quality of life for citizens,” he said.
But Sola Olaleye, a social affairs analyst, cited that addressing insecurity, particularly in farming communities, is vital to ensure a stable and productive agricultural sector. He said a secure environment will encourage investments in agriculture and reduce the risk of food supply disruptions.
“Finally, encouraging public-private partnerships and involving the private sector in policy formulation and implementation can lead to more effective and sustainable solutions to reduce the cost of living,” he added.
NATIONAL ECONOMY notes that reducing the high cost of living in Nigeria is a complex challenge that requires a multifaceted approach. It calls for concerted efforts from the government, private sector, civil society, and other stakeholders to create an enabling environment for economic stability and prosperity for all Nigerians.
